Wednesday, January 28, 2009

Corus, Europe’s second-largest steelmaker, today announced plans to cut 3,500 jobs as part of a new strategic initiative launched to enhance competitiveness. “It should bring annual improvements in operating profit of more than £200m," a statement released by the company said.

Corus currently employs about 42,000 people and a little over half of them are stationed in the United Kingdom. A company spokesperson told Business Standard that jobs will be cut in three plants — 1,100 in South Wales, 1,400 in the United Kingdom and another 1,000 in Holland.

Tata-owned Corus is the latest steel maker to announce downsizing of its workforce. Faced with an economic slowdown, steel makers the world over are cutting output, cancelling investments and reducing their workforce. ArcelorMittal, the world’s largest steel maker, plans to eliminate as many as 9,000 jobs and curtail production by a third.

Corus CEO Philippe Varin said the structural changes have been carefully considered and are essential for the future of the business. "This will ensure Corus is in the best possible shape to compete strongly in the future," he said.

The new initiative includes sale of Corus' aluminium smelters in Germany and the Netherlands (announced on January 21) and sale of a majority stake in Teesside Cast Products. The group proposes "mothballing" of the Llanwern hot strip mill and the restructuring of engineering steels into two businesses — a specialty steels business at Stocksbridge and a bar business at Rotherham.

Community, the Corus union, in a strongly worded media release expressed its disappointment over the job cuts and said it will continue to hold dialogue with the company to avoid this.

"This announcement is a devastating blow to workers and contractors at Corus and will have a knock-on effect for thousands in steel communities across the UK,” Michael J Leahy, the general secretary of Community, said. “This is no reflection on the workforce, which has consistently delivered productivity improvements year-on-year."

Later, a Community spokesperson added that there will be dialogues with the management of Corus to ensure that the job cuts are either avoided or minimised.

The Tata group-owned Jaguar-Land Rover (JLR) has denied reports in the media that yesterday's £ 2.3-billion credit relief (as loan guarantee) announced by the UK government will benefit it more than rest of the automobile industry in the UK. Reports in the media that followed UK Business Secretary Peter Mandelson's announcement suggested that JLR and Vauxhaull Motors (a subsidiary of General Motors) would get more than 50 per cent of this fresh relief provided by the government.

Tony Woodley, joint general secretary, Unite (union), yesterday said, "£2 billion sounds like a lot of money, but at least half of this will be taken up by Vauxhaull and Jaguar-Land Rover alone, leaving little or nothing for the hundreds of component companies."

JLR’s position on the neutrality of providing loan guarantee to all UK auto makers was further reiterated by Paul Everitt, chief executive of SMMT (The Society of Motor Manufacturers and Traders), the industry body for UK's automobile companies. He said ownership of the car marker will not be a factor in providing the loan guarantee by the UK government.

A JLR spokesperson today said that these were speculations by the media and the relief package announced by the UK government was only loan guarantees. The spokesperson said that representations to the government made by the group were more as part of the UK automobile industry. According to SMMT, UK's apex automobile lobby, there are 27 cars and commercial vehicle manufacturers in the country, employing nearly 800,000 people with consolidated production of 1.75 million cars and trucks.

Apart from seeking assistance from the government to overcome the current recession, JLR has also put in place a voluntary redundancy programme. Over the last six months, as many as 2,000 job had been removed and an additional 450 jobs are expected to be axed in the next few months. Of these 450, 300 would be managers in JLR and another 150 from the agency supports or contractors.

In calendar 2008, Land Rover had witnessed a 17 per cent fall in sales while Jaguar improved its sales by 8 per cent during the same period, according the group's representative in the UK.

Thursday, January 22, 2009

UK jobless number near 2 million markSKALYANA RAMANATHAN London, 21 JanuaryCalendar year 2009 has opened with a whimper in the United Kingdom with the unemployment number racing towards the two million mark.The UK government’s Office of National Statistics today released the updated labour market data for the three months ending November 2008, which showed the unemployment number has increased to 1.923 million, up 0.9 per cent from the previous year’s number.Nearly 225,000 jobs have been cut in the said period, an increase of 50 per cent on the previous quarter.Trades Union Congress (TUC) General Secretary Brendan Barber said, “Compared with a year-ago (period), the picture is even worse —the unemployment rate is higher for both men and women, for every age group and for every part of the UK except Northern Ireland. More importantly, these figures stop at November 2008 and do not take into account the redundancies announced over the past eight weeks at companies like Woolworths, Santander, Barclays, Denby, Land Rover, JCB, Burberry, Zavvi, Grattan and Empire Direct.” “Unfortunately, it seems certain that unemployment will continue to rise for at least the first six months of 2009, with a very strong chance it will pass the 2.5 million mark by June,” said Barber. TUC is UK’s federation of trade unions with 58 affiliated units and membership of 6.5 million people.Institute for Employment Studies Director Nigel Meager said, “Looking at the months ahead, the picture will be bleaker for new entrants to the labour market. Recently laid-off workers are likely to enjoy an advantage in the competition for the shrinking number of job vacancies, and young people coming out of education and training, especially those with lower levels of qualifications, will struggle to get the jobs they had hoped for.” The official data released today also showed there were 31.53 million workforce jobs in September 2008, down 134,000 over the quarter. Most sectors showed decreases in jobs over the quarter.Nearly 225,000 jobs have been cut in the said period, an increase of 50 per cent on the previous quarter

That sinking feeling in London officeSKALYANA RAMANATHAN London, 12 JanuaryThe underground rail services to Canary Wharf is once again jam-packed as financial services professionals head back to work after a long festive holiday in Europe – like their counterparts in most other western markets. The mood outside No.1 Canada Square hardly reflects the sombre outlook for the tenants on the buildings 10th Floor.This floor is occupied by Satyam Computer Services, which had last week managed to earn the unenviable title of "Indias Enron" for doctoring its balance sheet and overstating its liquid assets balances by a billion dollars.Even as heads rolled back home in India, nervous IT professionals and their more swanky colleagues in the sales teams in Satyam London offices are taking interviews with competing Indian IT companies who also have operations in Europe.The offshore development centre for Satyam in London is at Basingstoke, Hampshire, while the Canary Wharf office is considered more a "hot seat office" used by travelling sales team to park their laptops to hook up to the companys global network. Satyams current staffers in Europe who spoke on the condition of anonymity said that there is clear sense of despondency among them. Above all, most feel completely let down by their senior management in India. They have more questions in their mind than answers to give a reporter.The biggest question among Satyam employees here that remain unanswered is this — when the mandate from senior management does not allow them to sign on deals with gross margins less than 30-35 per cent, how can net profit margin can be in single digit."Unlike Infosys or Cognizant, we had to fight a tough battle within our own offices to sign in new accounts. The guidelines were way too stringent to ensure that only the best and wellpaying clients were booked. All that seems to be a waste now," said an employee.A former Satyam employee from Europe adds that until last quarter collections from the European operations was in the order of $30 million a month. A Satyam spokesperson in Secunderabad confirmed that 20 per cent of the companys $2 billion global revenue, which is around $400 million, does come from the European operations. Until the bolt from the blue hit the company last week, both current and former employees of Satyam had no clue of the internal problem that Raju made public.The ones worst hit are those sitting on large stock options with this company. "Since the stock market slide and until Raju confessed of his misdemeanour many of us have lost a few crores of our personal savings. My life savings have been wiped out for no fault of mine," says another Satyam employee.The re-constitution of a new board at Satyam does bring a sense of confidence among those left fighting-fire at Satyam. "We have some great clients in Europe and the cash flows are good too. What we need is a good top management to return to normalcy which is what we expect from the new board," says a senior member of Satyams European operations.Some of the premium clients of Satyam in Europe such as FIFA, ArcelorMittal, Unilever have not made any statements on their future relationship with the Secunderabad-based IT company.PHANTOM TOWER: No. 1 Canada Square, on the 10th floor of which Satyam has its office in London SKALYANA RAMANATHAN